Sioux Falls Best Business-Beginning Burg

The Sioux Falls Development Foundation sat on $91,000 of its city subsidy last year, and Sioux Falls still came out #1 in WalletHub’s ranking of the Best Large Cities to Start a Business:

Source: WalletHub

WalletHub looked at the 150 largest cities in the U.S.—by Wikipedia’s data, Sioux Falls just makes that cut at 147. We thus don’t get to compare Sioux Falls with in-state rivals. But the only other city in a neighboring state to make the top 10 is Lincoln, Nebraska:

Overall Rank City Total Score Business EnvironmentRank Access to Resources Rank  Costs Rank
1 Sioux Falls, SD 52.65 9 55 12
2 Grand Rapids, MI 52.52 16 43 13
3 Oklahoma City, OK 52.22 7 81 18
4 Lincoln, NE 52.03 34 4 66
5 St. Louis, MO 51.81 55 11 7
6 Salt Lake City, UT 51.07 98 3 26
7 Charlotte, NC 50.85 6 60 48
8 Springfield, MO 50.77 90 38 1
9 Tulsa, OK 50.69 66 21 4
10 Amarillo, TX 49.7 18 31 76

Regionally, Omaha ranks 19th, Minneapolis 40th, Des Moines 60th, and St. Paul 105th.

WalletHub weighs these 16 metrics in its scoring for new-business suitability:

Business Environment – Total Points: 50

  • Length of Average Work Week: Full Weight (~8.33 Points)
  • Average Growth of Number of Small Businesses: Full Weight (~8.33 Points)
  • Number of Startups per 100,000 Residents: Full Weight (~8.33 Points)
  • Average Growth of Business Revenues: Full Weight (~8.33 Points)
  • Five-Year Business-Survival Rate: Full* Weight (~8.33 Points)
  • Industry Variety: Full Weight (~8.33 Points)

Access to Resources – Total Points: 25

  • Financing Accessibility: Full Weight (~4.17 Points)
    Note: This metric was calculated by dividing the “total annual value of small-business loans” by the “total number of small businesses.”
  • Venture Investment (amount) per Capita: Full Weight (~4.17 Points)
  • Prevalence of Investors: Full Weight (~4.17 Points)
  • Human-Capital Availability: Full Weight (~4.17 Points)
    Note: This metric was calculated by subtracting the “unemployment rate” by the “number of job openings per number of population in labor force.”
  • Higher Education Assets (Average University Score & Number of Students Enrolled per Capita): Full Weight (~4.17 Points)
  • College-Educated Workforce: Full Weight (~4.17 Points)
    Note: This metric measures the percentage of the population holding at least a bachelor’s degree.

Costs – Total Points: 25

  • Office-Space Affordability: Full Weight (~6.25 Points)
    Note: This metric measures the per-square-foot cost of commercial office space.
  • Labor Costs: Full Weight (~6.25 Points)
    Note: This metric measures the median annual income of the city.
  • Corporate Taxes: Full* Weight (~6.25 Points)
  • Cost of Living: Full Weight (~6.25 Points) [John S. Kiernan, “2016’s Best Large Cities to Start a Business,” WalletHub, downloaded 2016.05.05]

Note that labor costs are part of the calculation. Cheaper labor means a better ranking… meaning a low-wage city like Sioux Falls where nearly half the kids qualify for free or reduced-price school lunches is a great place for the entrepreneurial class to launch its dreams.

3 Responses to Sioux Falls Best Business-Beginning Burg

  1. Roger Elgersma

    So why is Springfield MO. 60% down the list and Sioux Falls is in the top 6% when Springfield beats us by a significant amount in both categories. Something is wrong either in the calculating or the results are including more than those two categories.

  2. I see it differently. When workers have more money they spend it and that’s good for the economy.

  3. I agree with you, Mark! This ranking obviously values keeping people in poverty rather than true prosperity!